from bloomberg world headquarters in new york, good morning, i am betty liu. here is what we're watching. fishes it in day is here, only hours away from what is expected to be the federal reserve's first rate hike in 10 years. we will break down the potential implications. investors in junk bonds have been spooked it's the collapse of the fifth third fund. awakens, this time first in australia. fans down under finally get to see one of the most anticipated movies in years, so how was it, what were the reviews? we are half an hour into the trading session and it is fit day, it is finally here.

let's get to the markets where ramy inocencio has the latest. we were remarking yesterday about the big move ahead of the fed meeting, and we continue to build on that. ramy: you would expect people to be in watch and wait mode, but people are bullish on what may happen. the markets have opened higher as we count down the announcement. the s&p 500 is up by .6%, the dow up by .7%. the nasdaq mirroring the s&p. all of this indicating investigators feel the economy is healthy enough to take on some pressure after the past nine years of near zero interest rates. take a look at the implied probability of a rate hike with the wirp function. futures traders are pricing in a 76% probability we will get at least a 25 basis point hike. stay with us for live coverage this afternoon.

a look at treasuries as equities rise. treasuries falling, pushing of yield. two basisr is up points. take a look at the two-year, up two basis points as well, but right now, .98%, the highest since may 2010 as investors pull out. very interesting, something we want to watch with his possible fed move. tell us about the treasury markets and where the yields have gone as we head into this. over the past five months, we have not seen bill -- volatility in the treasuries market at this level. i want to show you this chart. this is all happening as investors expect the fed to raise rates. 10-day an index of the price volatility in the treasuries market, which rose to 6.66 on tuesday.

last time this happened was back on july 2013, so we are definitely seeing volatility come into the treasuries market as we await the fed funds futures target rate potentially being risen 25 basis points. , lookingpast few weeks at the price of oil, the markets have been tracking oil pretty much but not today as the fed looms larger. is down after the gains we saw on monday and tuesday, down by nearly 1.6% today. we are below the $37 threshold. , butd briefly did below 2% we have since pulled back. betty: thank you. let's check in on the bloomberg first word news with vonnie quinn. good morning, a top russian diplomat says turkey should pay compensation for the

russian warplane it shot down. turkey rejected the plan. the russian fighter was on a bombing mission new the border when it was shot down in november. one of the pilots was killed while the second was rescued. violatedys the jet airspace while moscow has denied the claim. black boxes on airliners will be easier to find thanks to new european union rules. flight data and cockpit voice recorders will have to operate for 90 days, instead of 30. airlines will have to track aircraft over oceans, and as of january 2021, the voice recorder will have to run for 25 hours, instead of just two. last night at the debate in las vegas, republican candidates try to convince the american public that they could keep america safe. jeb bush said that the proposed ban on muslims in the u.s. would

cripple foreign policy. here is one exchange between the two. >> this is tough business. >> and you are a tough guy, jeb. >> you are never going to be president of the united states by insulting your way. >> so far i'm doing better. you started over here and you are moving further and further. trump called bush a total disaster and said that he was trying to breathe life into a failed campaign. in baltimore, deliberations theinue in the trial of police officer accused in the death of freddie gray. jurors said that they were deadlocked. gray died from injuries he suffered while in police cost me. likely to be a milestone date for the federal reserve. betty liu will have more on that in just a moment. that is a look at the first word news. you can get more at the new bloomberg.com.

betty: thank you. fed, hourssed on the until they make the decision on whether to raise rates. for a look at what to expect from the fomc today, let's bring in carl riccadonna. charles calomiris, the director of the columbus business school program for financial studies. great to see you. carl, let's start with you. by all means, we expect the fed to raise rates today. what do you make of this rally we have going into this decision? >> i think there was some panic earlier in the weekend, at the also in higheek, yield, energy. of confidence for

economic conditions. i don't think the economy is doing super, problems in the manufacturing sector, as we saw in the latest industrial production numbers out an hour ago. this is a vote of confidence that we have moved away from the financial crisis and can start moving to normalizing policy. i think one of the interesting story that has been circulating among business economist, is if you look at the increases,ed rate stock markets have always been positive in their growth. slightly positive. the point is, people have cal med down about this. typically, when they initiate rate increases, the markets do not fall. betty: but don't they fall afterwards? >> when the fed is pumping the brake pedal, but we are a long

way from that happening. that happens when the rate gets to 3%, 4%. >> in this cycle, you could tell another potential story. the real risk is outside the u.s. right now. you could imagine there is a lot of interest in moving into u.s. assets in anticipation of the strengthening of the dollar, maybe lots of inflows into u.s. equity markets. even though you may think equity markets are overpriced, where are you going to put your money? the main concerns in terms of risk, going forward, are outside the u.s. betty: someone who has quite the bearish view is sam zell. he was on this morning. he was saying that he thinks there is a high probability we will be in recession within the next 12 months. listen to what he's had to say about the fed. >> this interest rate hike is probably six or eight once too

late. -- months too late. the economy is closer to going down been going up. if the economy is rolling into recession, they should not be going at this, and it is not too late under that scenario, so i don't agree with the assessment. betty: i did not understand it either. raising rates eight months earlier but then we see a recession? >> some forecasters are saying raise rates so you have ammunition to cut later, but this is contrary to what the fed and most policymakers have been telling us. the core of the committee has repeatedly indicated, the best insurance against having to cut rates or add additional stimulus down the road, is to keep rates lower for longer. that is what the fed is doing. said, let the economy overheat a little bit, so that we can ease if we need

to. betty: isn't it true that every time we had a rate hiking cycle, that was succeeded by recession. it has led to some. >> and certainly can. i don't think that is the risk right now. the bigger risk is that we will too slowly.ly -- i have a lot of respect for sam zell, but we are talking about a quarter percent rate increase, markets are pricing in very little in the coming year in terms of follow-on rate increases. i think we are more likely to be surprised by a need for more rapid fed action in 2016 than regretting moving at all. if you look at any kind of for which a be the stance of monetary policy, it should be accommodated. i think we could take away one

or two percentage points and we would still be very accommodative. company andlen and the whole world will welcome the problem of having to raise rates more aggressively if that does not transpire. betty: carl riccadonna, charles calomiris, thank you. with bloomberg for coverage of this historic rate decision. just under four hours away. stay tuned to bloomberg television. much more ahead in the next half hour. says junk bonds are now much cheaper than stocks. oil prices continue to fall. we will look at that lunch and look -- plunge and look at how low prices could go. winners and losers in last night's republican debate in las vegas. ♪

betty: good morning and welcome back to bloomberg markets. it is time to take a look at the biggest business stories in the news. to make its self driving car unit a stand-alone business next year, according to a person briefed on the strategies. the car will fall under the alphabet corporate umbrella and will be used in right to hire services. bats has filed for another ipo

and the list it's shares on his own exchange. amazon is warning british customers that the hoverboards they are selling may be unsafe. they say some are unsafe because they have a noncompliant u.k. plug that could explode or catch fire. customers should return them to a recycling center. basically discarding them. you can always get more business news at >> thank you. -- at bloomberg.com. let's get a check on the movers today with ramy inocencio. ramy: let's talk about some of the gators right now. let's go to retail. 1.7%. rising haveis because they increased the low end of its 2016 earnings guidance and is

raising the dividend by 21%. they added pharmacy operations s, and otherhome services inside target stores. honeywell having a great day today, it's best since august. they are up 4% after saying 2016 profit may rise 10% after the latest round of cost cuts. they are setting their midpoint $6.60 perat just under share. investors who are long in solar stocks are seeing a brighter day, rallying this morning. you can see the numbers, heavily in the green. -- edison of by nearly 9% 19%. some power of by 17%. all of this coming after u.s. congressional leaders agree to extend tax credits for renewable energy in exchange for lifting trade restrictions on u.s. crude oil exports. paul ryan says the house is

planning to vote on the spending bill on thursday, to the order of about $1.1 trillion. betty: thank you. bond king bill gross is weighing in on the route in junk bonds, saying that the looked cheap compared to stocks. as you can see, that is the widest spread since 2010, according to data compiled by bloomberg. bill gross says this is the perfect time for an illiquidity discount. it is like the pelicans in your beach. they are just diving down and picking up those fish. is joe cioli, who has been looking at this. give us some context. how unusual is it to see that spread widening? joe: right now it is up 3.5, the

that is ace 2009, and product of two things, the selloff in high-yield, down 6% over the last couple of weeks, side, stocksher have been up all three days this week, up 10% from the august low. also, looking at an earning yields basis, two street corners of earnings contraction with a third work as for the fourth quarter. those are the things that are explaining this time version. it has been a dynamic that we have not seen the start of the bull market. betty: how often have we seen something like this in the last two decades? joe: we have seen it twice since 2003. twice, high yield bonds have rebounded about 1% compared to stocks over the three months following that. it happened again in 2010. so bill gross is right, this is a buying opportunity? >> the data goes back to 1995,

so it would be a helpful exercise to go back to the 1950's, but it has been something that has been successful since 1995. does anybody agree with bill gross, what is the sentiment out there? joe: i spoke to the chief strategist at wells fargo yesterday. his point was basically that this high-yield selloff will abate at some point. people are talking about contagion. the more people talk about it, the less likely it is to happen. it,more prepared for contagion really comes out of nowhere. he is bullish in that sense. there is also this idea, when you talk to people, you have energy as the reason for this terrible high-yield performance. some of these stocks will shake out eventually. it depends on your timeframe of

when you want to buy on the debt, but when these faulty energy companies go bankrupt, it could be a nice buying opportunity. betty: thank you very much, joe. coming up, speaking about energy, the u.s. intent to lift the 40 --year-old ban on oil imports. the difference that will make in the global oil glut. ♪

betty: welcome back to bloomberg market, i'm betty liu. oil is extending its losses amid speculation the u.s. government will and a 40-year banned on crude asked boards. house and senate leaders reached an agreement last night. -- exports. difference will american crude have on the global markets? i want to bring in commodities

guru alix steel. do you think any of this is anticipation of this vote? alix: i would say more the dollar and the fed. there would be more demand for wti. that would implicate a price rise. on the other hand, more wti in the market means more oil in the market, which means lower prices. you can make an argument either way. this is why the export ban may not matter. you are looking at the spread between wti and brent. the difference in price is about $.80. wti needs to be that much cheaper for you to want to get into the midwest through the gulf coast, on a take her to a different country. analysts say that spread needs to be closer to four dollars. you will do it, but economically, it does not make sense right now. betty: explain to me how competitive u.s. oil is, compared to oil coming out of the middle east or latin

america? alix: it depends on what you are talking about. latin america has heavy oil, so it would not be competitive with that. saudi arabian oil, because it is light and sweet. this is the spread between brands and the vti -- excuse me, the curve. the yellow line is where prices will be out over the next 10 years, orange is brent. we talk about the differential. we do not see a differential that makes sense until 2018. no one will want to buy our oil economically for the next two years because prices are not low enough versus brent. to your question of where it would go, you could make an argument, it could go to latin america. we could do a swap, we take your heavy, take our light. also, asia. 70% of saudi arabian exports go

to asia. that is a critical market and they are not giving that up without a fight. betty: in the meantime, where does the vti crude go? itx: you heard some say that could hit $55 a barrel by the end of the year, which is a bullish estimate. we are still dealing with the same issue. if you have more oil coming out of the u.s., you are adding to the supply glut. you need demand to either pick up to respond to that supply, or you will need supply cuts to come in just as much, in order to shut down supply. that is why we hearing conversations about going to cash cost, about $20 a barrel. it needs to be that much lower to cut supply. producer, you a can export oil, are you going to want to cut? you could be exporting a lot to asia or the middle east. i should point out, the u.s. has already been exporting 500,000 barrels a day since october.

betty: so they are doing it, just not officially. >> different qualities, different types. betty: what about the possible fed rate hike, any affect on oil? alix: the dollar has become more important as well as the volatility in terms of oil prices. that will be a good indicator. betty: thank you, alix steel. still ahead, contentious rivalries in the spotlight at the republican debate. it was like fireworks last night between jeb bush and donald trump. ♪ you used to sleep like a champ.

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news desk. vonnie: greek and euro border authorities have launched the andch and rescue operation the agency after a boat carrying dozens of refugees sank off i went of less posts, leading to death. boats are coming to area for survivors. investigatinge two men arrested several days ago for possible links to the attacks in paris. the two were arrested in a migrant shelter. officials say the suspect arrived in europe from the middle east but refused to give further details. united nations experts say that iran has violated sanctions involving ballistic missiles. it has to do with iran launching a media range missile in october 5 the sanctions barred iran from launches capable of nuclear weapons. the launch was the first after i ran and six nuclear powers reached a landmark deal. a new poll finds majority of americans oppose banning assault weapons for the first time in

more than 20 years could the agency news poll finds that 53% oppose such a ban. say that encouraging people to carry guns is a better response to terrorism been tougher gun laws. 22% have confidence in the government's ability to prevent loan will terror attacks. the government's health insurance deadline is being extended. the obama administration says anyone needing coverage has tomorrow until midnight to sign up now. the head of healthcare.gov says more time is needed because of unprecedented demand. that is a look at our first word news right now. you can get more on these and other breaking stories 24 hours a day at the new bloomberg.com. i am vonnie quinn. betty: thank you so much. read headlines coming up on the side of your screen may on oil inventory. this is our weekly inventory report. crude inventory up 4.8 million barrels. that is according to that yet i a.

-- that eia. inventories of 2.5 6 million barrels. we are seeing the buildup and oil. $35 barrel sothat we will keep watch to see these inventory numbers as they continue to build up in the u.s. and if that will affect the price of oil and extend those declines. -- at the politics republican president will debate, the focus was on keeping america safe. ted cruz called for more attacks on islamic state . >> the first persian gulf war, we launched hundreds of attacks a day. we carpet bombed them. obama is launching between 15 and 30 attacks but it it is photo op foreign policy. we need to use overwhelming airpower. we need to the arming the kurds and fighting and killing isis where they are. betty: marco rubio says the u.s.

is at war with radical islamic terrorism. >> this is what is important to do. we must deal with this threat of radical islamist, especially from isis. this is the most sophisticated terror group that has ever threatened the world or the united states of america. betty: joining us now is megan murphy. we just saw two of the candidates speak about this, but did anybody stand out on foreign policy and the islamic state. ? megan: last night was the angriest performance. those two men may be the last two standing in this republican -- marcoarket overview rubio and ted cruz. there are new contours of the race coming. those two are looking to distinguish them selves on foreign policy. jeb bush who has languished in the poll really took it to and while they broke through on the messages,

it's unclear. it was at times a little bit angry between the candidates could you wonder when the voters reach a saturation point. the rise ofupt donald trump with him rising so high in the polls? betty: did anything change in the game in terms of disrupting his rise? megan: we do not see a game changer could we saw candidates give very good advice on where they would take the debate. and ted cruz,o they see themselves as the candidate to maybe the choice of partly the evangelical wing and the establishment wing and form that voter support that can carry them through iowa and new hampshire and south carolina. donald trump once again avoided any sort of fatal blow last night. jeb bush sparred with him quite effectively. ed quitearri effectively. i'm not sure it will change anyone's numbers too much to write now, i do not think anyone really broke through.

much forank you so that analysis. megan murphy, our washington bureau chief. it certainly was an entertaining last that if it want to bring in at barnard from .ank capital . i always bring you on as a repulsive voice on this. used to theing to th idea that donald trump could actually win this? i'm saying the nomination. ed: you have to think about it seriously. the polls are highly applicable. trump is in third place on online betting. betty: who is in first? ed: rubio with 37%. ted cruz picked up a couple of points last night at 24%. that 21 percent.

after that, it falls way back to christie. faith ind put so much online betting and not the polls? ed: it has been far more productive than the polls, especially at this stage, which have been highly comfortable. -- example, new green rich newt gingrich was winning at this time. advertising has a big effect on the race. we do not see it in new york, but iowa and new hampshire will see a ton of negative ads port on. uses media topet diminish other candidates quite effectively. he is the only one who gets much airtime. there's not a lot of money being spent. there is money spent by bush meme a positive advertising, which doesn't really work. though?ow do you feel the betting sites are wrong and is right and

donald trump is the front. how do you feel about him? ed: i don't support him. betty: who have you supported? ed: i supported bush. i gave money to bush. he is not really gain traction. we are looking to whom the logical alternative would be good online betting will not only show you the probabilities of winning the republic and primary, but the probability of winning the presidency as well. odds byook at the comparing those two, you can see the conditional probability if you win the primary, what is the chance he will win the presidency. candidate winning by far on that is christie. betty: christie? ed: and then you have trump is rubio and actually romney in that 48-45%. betty: i don't know. [laughter] about romneyesting is that he is sixth in the probability of moving the republican primary in the online betting at half a percent.

betty: but he still there. trying to make'm is that donald trump is emerging as a legitimately electable candidate in the realm of romney and rubio and bush, who are all in this 45% range. 38% and christie is ahead at 53%. people are warming up to the idea that even though he makes outrageous comments, if you look past those outrageous comments, he actually puts forward some fairly practical, thoughtful things that i think a lot of people resonate with. one of those is that immigration and trade pulldown middle-class working wages. i think the middle-class and working class are upset about that. betty: but his solution is not practical -- building a wall. ed: this solution is theatrical. i think some people forgive him for the theatrics and take him a little more seriously than we all take it at face value. betty: i want to play for you

and our audience that moment between trump and bush. let's play that. the simple fact is that if you think this is tough and you're not being treated fairly -- >> this isn't tough. i wish this was always as easy as you, joe. >> we are dealing with islamic terrorism. this is a tough business. >> you are tough guy. >> you will never be president of united states by consulting your way to the presen -- insulting your way to the presidency. >> you started over here and you moving further and further. pretty soon, you'll be off the end. betty: it doesn't matter that he's in single digits and trump is not. what is he going to do to turn that around? ed: i'm not sure if jeb can turn it around at this point. yes had 20 chances, but has not been able to do it.

he is at 40%,y the likely percent of vulcan is 40% of 40%. i think he can resonate with by but ify -- the minority, he becomes a candidate, he will put the house at risk of the republicans losing it because there are a lot of people who will not go to the polls and vote for him. that means they will not vote for the congressional candidates as well. that will set back a lot of the make it verynd difficult. it difficult. much more ahead "bloomberg markets." the highly new anticipated "star wars" some comes out. are you a fan? ed: i was a little too old. betty: we will get paul allen's impressions of it. no holds barred.

how to turn mixed martial arts into a multimillion dollar sport. is an ipo next? the ceo will join us live and get a preview of how the markets may react. it will not be quite as violent hopefully as that. the fed is likely to raise rates today. we will go over the whole spectrum of reactions. those stories and much more coming up on bloomberg television. ♪

betty: welcome back. this is "bloomberg markets." it's time for the bloomberg business flash. let's go to vonnie quinn for the biggest business stories in the news. vonnie: the canadian railway has sweetened its takeover offer for norfolk southern. to $25 payoutnext

if certain events occur after the takeover. norfolk southern has rejected to previous offers. manufacturing did not grow last month. factory output in november was held back by less production of durable goods like cars. meanwhile, wonder whether led to the biggest slump in utility output in more than eight years. pharmaceuticals has cut its forecast for the drugmaker said it would pay down debt. it's trying and down questions about how it distributes its products. the company has been linked to a mail order pharmacy. the pharmacy has been accused of giving doctors and patients access to these drugs even when insurers would not cover them. you can always get more business news at bloomberg.com. i am vonnie quinn. betty: it is time to get you caught up on the action around the world. we will start in asia where it was green across the screen. asian stocks rallied, pretty much piggybacking off of us.

it's the widely anticipated set rate decision. the nikkei up 2.6%. a little bit of a different story in china. let's look at what is going on in europe right now. another rally is underway, but we are losing steam in our own rally. i want to get to mark barton, who is seeing on the screen there that you have got green and large parts of europe. mark: the second day of gains. the last time the fed raised rates, the stocks rose. will stocks rise if the fed raises rates? we have looked at data going back to 1987. what tends to happen is that the 20 days following a rate hike, the euro stoxx 50 falls by about 2.4%. in the three months after, it recouped those losses and then some, rising by 3.2%. a fed rate hike is not necessarily a bad thing for the european stock markets.

big data today out of the u.k.. growth is slowing here. it slowed to 2% in the three months to october. that tells us the bank of england is a long way from hiking interest rates. sterling as a result is down by a fifth of 1% against the dollar. do you like "star wars, b" by the way? betty: i'm just joking. yes, i do. [laughter] how can you not? has goneopinion of you to the seller could how can you not love "star wars?" betty: we will talk about that in just a minute. i know you can't wait to watch it. we will be back with the european for a look at the european markets, abigail the little -- doolittle is looking up big news out of google. abigail: the company plans to take their self driving car unit and make it a standalone company

under the alphabet corporate umbrella in 2016. this unit will offer cars for hire to challenge the likes of uber and will launch first in san francisco and the austin, texas and campuses that are confined. this gives us the clearest indication of how they plan to get revenue from the technology developed in 2009. google is on pace to finish this year at a record high. solar stocks, they are trading higher on a budget deal that sense tax credits to renewable energy companies. broad capital is very bullish on this. he highlights solar city as a company likely to benefit. solar city is up nicely today. back to you. betty: abigail, thank you so much. after months of anticipation as mark talked about, the latest installment of "star wars" is finally here. diehard fans flock to the premier in sydney. will fanatics be satisfied with the film? reviews are coming in.

paul allen is live and he has just seen "the force awakens." we have to ask you -- how was it? paul: betty, i thought it was excellent. i thoroughly enjoyed the movie. not wanting to give too much away, i won't reveal any plot spoilers. it heavily references the original trilogy. there is a cantina scene for example. tricks the old jedi mind and a good old-fashioned family confrontation on a catwalk that at those episode five "the empire strikes back." it is in many ways jj abrams's letter to the original trilogy. i spoke to a number of fans when they exited the cinema. every single one of them said they absolutely love the film and cannot wait for episode eight. i even overheard some people saying that they plan to turn around and head back into the cinema. we just had the midnight

screening open to the public here. it was just before three clock in the morning it sydney. some people want a second taste. there will be plenty of opportunities for fans to do just that. i am at point cinema. sessionsplanning 7000 of "star wars: the force awakens" in opening week. when disney bought the rights from the franchise for $4.1 billion, a number of analysts questioned their wisdom. it's starting to look quite like a bargain, betty. betty: you got me anticipating going to watch it. thank you so much, paul allen from sydney on the new "star wars" film. it was excellent. still ahead, the ufc has been dominated both in the rain and a business. we will be joined by the ceo leading the charge. that is next. ♪

betty: welcome back to bloomberg television. i'm betty liu. after a rocky 2014, the ufc is bouncing back and dominating both in the ring and also in business. last month, we saw a ronda rousey versus holly home. it was the highest attended fight in ufc history, selling more than 56,000 tickets. we are joined now by the ufc chairman and ceo. lorenzo, great to see you. it was funny because we had and on a few moments ago and i asked if you watched "star wars," and he said i'm too old. i asked if he watched mma, he said yes i'm watching mma. are you finding that sponsorships and sponsors are getting over the nature of the sport? lorenzo: we have definitely broken down that barrier. when we first bought the

company, it was tough to convince sponsors to come on board. with our partnership with fox sports, they have been successful in bringing on mainstream sponsors like geico and budweiser and a number of big brands that want to associate themselves with our brand and with our sport. betty: do they come with any requirements? got a clean it up a little bit? there is a lot of blood and guts on the floor. lorenzo: not at all, in fact. now that we are on fox and we performed so well. our ratings are up 3.5% year-over-year. we are one of the four pillars for fox with the nfl, major league baseball, and nascar. we are completely assimilated now into the sports culture into america. people have accepted that. betty: aren't your rights coming up soon in the next five years or so? lorenzo: our rights come up at the end of 2018. that is when there are not a lot of other rights and sports that are going to be coming up between 2017 and 2020 as most of the other leagues's rights are contracted out through 2020 and

beyond. betty: do you think you will be able to get a good number? lorenzo: i don't know. we are obviously helpful. the product has performed extremely well. we have that coveted young male as far as our core audience, which is what a lot of advertisers are looking for. live sports is really where the value is in today's media world. betty: would you ipo the ufc? lorenzo: never say never, but we currently do not have any plans to do that. at this point, we do not have the need for capital. business is going very well. 2015, we broke records on every metric. we are coming off a high, particularly last weekend with conor mcgregor and jose aldo. they did huge numbers at the gate and pay-per-view. betty: conor mcgregor -- is your highest paid? lorenzo: ronda rousey and conor mcgregor are similar. they are the two highest paid. betty: how much do they get paid? lorenzo: well into the millions

of dollars. betty: let us say that ronda rousey and holly holm fight, how much did that make? lorenzo: a million buys and pay-per-view. there was 50,000 -- 57,000 at the gate and australia. it was very good. the earnings potential for those two stars is very high. i told a reporter last night that either connor or wander could be our first $100 million athlete. betty: she just got beat up by holly holm though. lorenzo: she is very focused on making a comeback. betty: i'm sure a lot of people are going to want to know. do you expect that there's going to be some sort of rematch between the two before ron da is ready? when will we see that rematch? lorenzo: we are currently talking to both camps. ronda rousey is anxious to get

that could she has commitments to film some movies and sprinkler she would be ready to compete in the summer at u of c and she is ready to compete in the summer at ufc 200 w. we like to put on the biggest fights that we can and that would be holly holm and ronda rousey 2. we were going to play a sound bite with you and oscar de la hoya. he said that he would love to see ronda rousey in the boxing ring. how would you feel about that? lorenzo: it's about mixed martial arts and that is where the future combat sports is. betty: lorenzo, thank you so much. we will be that. ♪

betty: it is 11:00 in new york and midnight in hong kong. welcome to bloomberg market. ♪

from bloomberg world headquarters, good morning. here is what we're watching. three hours until the suspense is over. a fed is expected to raise interest rates for the first time in nearly a decade. but what happens after? some executives are telling investors it may not be the holiday celebration a think. we will tell you why. and it is the holidays and that means they gun sales for walmart. masste worries over shootings and ammunition, they keep selling. want to head straight to the markets desk where ramy inocencio has a look at the markets. what a difference. earlier, it was right at the open but now we are at session lows. betty: we are getting close to

the decision. ramy: people are looking at what will happen. after a strong open that we saw, the s&p 500 is up one third of 1%. the dow and the nasdaq are a little bit less than that. energy shares are the biggest lacquers in oil. as we get closer to the fed's do -- and the-- bloomberg terminal with me. let's look at the implied probability of a rate hike with the -- function. we are taking a look at this number. atures are pricing in probability that we will get at least a 25 basis point rate hike today. we will have live coverage all day. over to you. looking for the possible rate hike in nearly a decade. the market has been kind to the polls -- the bulls.

ramy: the question is, what happens after today and with the market and the s&p. take a look at this chart. the s&p is in the white. and this is the target rate with the blue. we have had rates near zero since 2008 and since then, the s&p has risen 134% and stocks have gained $15 trillion in value. but the index is still headed towards the worst december in 13 years. so we will see if this spread actually narrows after today. betty: thank you. ramy inocencio at the market desk. now i will send it over to the first word news. pimm fox has more. -- agree on the package of tax and spending bill in order

to avoid a government shutdown. the bill makes tax cuts permanent and it puts a ban on the export -- it lists a ban on the export of crude oil. the house plans to vote on the bill today. schools in los angeles reopened today. more than 1500 locations were closed yesterday after the l.a. school district received an e-mail threat. the fbi determined the threat was not credible. and a new poll revealed that the majority of americans oppose a ban on assault weapons. the first time in more than two decades that americans have responded negatively to a ban on the weapons. sayrding to the poll, 47% encouraging people to carry guns is a better response to terrorism compared to more stringent gun laws. in baltimore, the jury deliberating the case of a police officer accused in the death of freddie gray will

consider. people protested outside the courthouse yesterday when the jury told the judge it was deadlocked. the judge told them to keep at it. freddie gray died from injuries while being transported to jail in police custody. nashville, a southwest airlines rolled off the runway while taxiing to a gate. it passengers were treated for minor injuries. that is a look at our first word news right now. you can read more and sign up for breaking news alerts 24 hours a day on the new bloomberg.com. from the bloomberg first word desk, i am pimm fox. betty: thank you so much. markets are counting down to the fed decision. what should we expect? it has been widely broadcasted. -- is here before he hands to

the federal reserve. brendan greeley, can you feel the anticipation? in washington, people are focused on capitol hill. we know what is going to happen. that, we broadcasted just showed the numbers of the terminal. they have made it so apparent that they are going to move that they would have a problem if they didn't. isnging the interest-rate like shifting gears on a car, you have to ease the clutch in, let people know what is going to happen. if they don't move right now, they will have a real problem in the future every time they want to make a change again. that said, we will learn some things today. we get a decision, a statement and a press conference. they have a chance to rip it up and start from scratch. we have seen increment of changes over the last eight committee meetings and i think we will find out, now that they

have decided when normalization will start, we will find out more about how they are going to do it. when the next hike will come. we will learn some things even though we all know that there will be a 25 basis point move. betty: indeed. we are anticipating this widely. we are going to learn a few things from the statement at the press conference. you are going to be there with the fed chair, janet yellen. what are you -- what do you want to know? what i really want to know is, what does the fed considered to be normal? inflation, the fed has said they will get back to their target rate of inflation in two years but the markets don't seem to think that at all. central banks all over the world have had this problem where they are looking at their own projections and they are not agreeing with what the market is seeing. the market is seeing .5%

inflation in the next year at the fed says it will get back up to 1.5%. i want to know what janet yellen doing to change her models. and what are you learning when you look at your models to understand inflation better? what is the, neutral real rate of interest? that tells us whether policy is comparatively loose or tight. we know there is disagreement about what the actual neutral rate of interest is. betty: we do. one of the criticisms against the fed is that not only are only is there dual mandate inflation and employment, but a lot of people look for price stability. and unfortunately we haven't had price stability over the next -- over the last few months. even today, the price of oil is falling off a cliff at this point. we had the majority numbers come out and that prompted a big

selloff. we saw an increase in inventories in the u.s. and now nymex is down. what are people telling you about how the markets will react, one way or the other? brendan: janet yellen has said a lot about oil. she says the fact that we can't reach the inflation target is a short-term problem. we are looking at energy costs and other central bankers have said the same thing. the measure that the fed uses to strips outlation food and oil prices and it is still not near the target. so even forgetting oil, we can't create inflation. you talk about the tool mandate but they have a new problem. fed can get to the unemployment target, they have brought unemployment down successfully. usually when they do that, inflation starts to go up on its

own. so they are getting down to the unemployment target and they cannot get inflation up to the 2% target. that is the problem they have, it is a new one. betty: thank you. you will be heading into the federal reserve to listen in and read the statement to us as soon as it comes across at 2:00. stay with bloomberg for coverage on that decision. 1:00, thes at statement will be out at 2:00 followed by the press conference. investors have been highly into banking shares. the question is, once the rate goes up, will they see a big payoff? cap --to bring in cap dakin campbell. dakin: the promise and the hope going into this meant that banks could charge more on loans and their net interest margins,

their profit margins, could expand. oft was the thesis for much 2015. they thought the fed would hike, inc.'s earnings would expand and things would be good. betty: it hasn't turned out that way. dakin: the fed has delayed his decision. month, bank managers and executives have been taking to private meetings and public conferences to camp down the enthusiasm for investors. what they're worried about is that even though the fed rate is raising its rates on the low end, the long end of the yield curve is not going to go up. on the reason is because inflation is not showing any signs of picking up. there is no sign that the fed is going to need to hike that, on thewar long end of the curve, investors

need to worry about inflation. betty: very little pricing power for the banks. dakin: that's right. a lot of bank assets are longer dated. betty: what is their biggest risk going into 2016? -- theireir busiest biggest risk is that short-term rates rise, long-term rates don't rise, so they have no pricing power on the loans and there is the thought that with seven years of ultralow interest rates, all of the depositors may look for the next best deal and do it quicker than they have in the past i goals. banks have a lot of deposits. they use those to fund loans. and the calculations were how much money they can make is based on past cycles. there is a concern now that deposits will leave the banks more quickly than in the past cycles because somebody over here raise rates a little bit.

deposit interest rates. that is the big unknown. that is where banks are saying, investors, don't get too excited. we won't know. ofty: are we making too much this? perhaps? dakin: i think for banks. it's not as simple as higher interest rates mean higher yields on loans. betty: are we overemphasizing this impact? dakin: it seems like it. a lot of bankers will say that. they say it is a more new artist. don't get too excited. it remains to be seen whether -- new information into the thesis or what we see in 2016. we may see a decline in banking shares in 2016. betty: exactly. i know you referred to history,

tell us about what happened in the past in the middle and the beginning of a rate hiking cycle? toon: i don't get into it much in my keys, but i talked to an analyst this morning who pointed me to the example of japan in the mid to thousands, when they raised interest rates, they are banking shares climbed from there on out. will see. are we like japan? we have talked about that in the past. in macroeconomic terms. betty: who knows? thank you so much. dakin campbell a bloomberg news. next, a christmas wish list for walmart shoppers and it includes guns and a lot of them. he will look at why they are the largest seller of firearms in the country. plus, the fed decision is just hours away. what would that mean for the next move of mario draghi? and it in-depth look at what are

the best performing assets since the last raise rates? you will be surprised. that is coming up on bloomberg television. ♪

betty: good morning and welcome back to bloomberg markets, it is time for a bloomberg business flash for the most important business news. pimm fox? google says it will make its self driving automobile business a stand-alone business next year. the car unit will operate under the -- corporate umbrella.

it will offer rides for hire. a direct challenge to uber. canadian pacific railway has enriched the takeover offer for norfolk southern -- norfolk suffolk. norfolk southern has rejected to previous offers from canadian pacific. could this second time he a charm? the global exchange is going public and it hope so. they attempted it but a wreck -- but a mistake wrecked its shares. you can always get more business news at bloomberg.com. back to you. betty: i want to head to the markets desk where ramy inocencio a showing why solar is making a who -- making a huge move. ramy: they are rallying this

morning. you can see the numbers behind me. up, solar city is rallying 27%. greed ares in the coming after u.s. congressional leaders agreed to extend renewable tax credits. that is in exchange for lifting crude oil.tions on a houseboat is inspected tomorrow. -- is going the other way. it is painting a gloomy picture for the industry. it shares are down and looking to be near session lows. down 4.4%. this after seeing earnings could drop by 80%. they attribute that to the slump. shares are suffering the biggest drop since march. apple is struggling today. shares are down by nearly .7%.

they are facing their fourth day of losses and their longest losing streak since november. -- the latest to lower their estimates for iphone unit sales. apple a staying positive for the long-term, expecting a boost when the iphone seven rolls out. let's take a look at what analysts are saying about apple today. this is the anr function. the white line here is apple stock prices. it has been sliding since june or so. analysts called to buy and that has been rising. you can see that getting smaller and smaller, declining as price targets are being lifted. analysts are still bullish but there is the question that maybe they got the recent drop off wrong. betty: ramy inocencio at the markets desk.

one product that is flying off the shelves at warm up -- at walmart is controversial. there are the largest seller of firearms in the country. have avoided getting tied up in the controversial debate over firearms. we are joined now to talk about more. are they the largest seller? shannon: they are. and inve 4600 stores over 2000 of those they sell guns. nobody else has that many locations selling tons. you could say that they are the biggest seller of which a wipers or anything else, but in guns, walmart is the biggest. betty: how have they been able to avoid getting caught up in this? shannon: when i look back over the years, it is all about business for walmart. despite what is going on right now in the political climate, we have had another mass shooting,

walmart says it is just focusing on the business. when guns aren't selling so well, it pulls back and went they are selling well, they put more in the stores. earlier this year there was a decision to stop selling a military style rifle and despite how that could have made walmart look like a model of corporate citizenship, no longer selling this gun, they said it is just business. to specialtyoing stores or a mom-and-pop shop. so walmart said we could make more money if we put hunting rifles in their place. so they have had the relentless focus on the bottom line, even when it comes to guns. that has helped them. neither side is happy about it at times but it has helped them to stay in the middle. betty: do they have stricter gun sale requirements? say, even should

doing things that make you responsible gun sellers will help you. that makes you look better to customers. customers feel safer in your stores. but in 2008, they were one of the first major retailers to calm out and put additional measures in place, and a group of mayors, led by bloomberg, was advocating for that. they screened all employees, they required guns to be locked up. and they strengthen the background check requirements. every retailer has to do requirements but walmart took the extra step where even if three days, the required time for background checks has passed, under federal law, you could sell it. walmart said no, we will wait until we have the completed background check back before we complete the sale, even if it takes longer. probably won't

hurt a lot of gun sales but makes them look good. betty: it certainly does. europe mentioned that it is all about business for them. have there been groups that have come up and targeted walmart to stop selling guns? shannon: the gun-control advocacy group, they had a favorable stance with walmart because of the actions they took in 2008. the gun owners group, gun manufacturers group, the didn't have much of a negative view. they were disappointed when they stopped selling the military style rifle, and overall, they understand that it is all business. betty: interesting. shannon pettypiece on walmart. much more ahead. european stocks are posting big danes ahead of the expected fed rate hike. we will discuss that next. ♪

betty: we are moments away from the european close and mark barton is joining me from london. mark? mark: we were up 1% and now we and the early decline on wall street is hitting us. a big day. our editor-in-chief will join us divergenceut the between the fed at the ecb. matcheseston, his fund 98% of its peers. what is the secret? stay with us to find out. ♪ you used to sleep like a champ.

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markets, it is 4:30 p.m. in london where markets are wrapping up their day. i want to bring in mark barton. we await the fed decision. mark: european stocks are registering the biggest two-day gain since october ahead of the fed rate decision. the european close starts right now. let's carry on, let's talk about what happened in the markets today. just a couple of hours since -- hours until the decision. to take youe going from new york to london in the next half an hour of london -- next half an hour. we are waiting this big decision and that has been a dominant focus. seem toes as well, we be taking a bigger and bigger hit here. mark: it has been amazing. oil is down, oil stocks are